Click Here to Learn More About Data Utilization ▶
What Is the Reality of Data Utilization
in Market Development?
Digital Transformation (DX) has been a hot topic for some time. DX refers to leveraging digital technology to transform existing business frameworks. While the term itself has existed since the 2000s, the number of keyword searches has surged in recent years, and many companies are accelerating their DX initiatives.
However, the reality is that there is significant disparity in progress. What challenges are companies facing when DX does not proceed as expected? This article provides a detailed explanation. *This article is the first in a four-part series.
The Root Cause of Stalled DX Is Data Integration
The catalyst for promoting DX was the report titled "DX Report: Overcoming the '2025 Cliff' in IT Systems and Full-Scale DX Deployment," published by the Ministry of Economy, Trade and Industry in September 2018. This report pointed out that if Japanese companies fail to achieve DX, they could face economic losses of up to 12 trillion yen annually from 2025 onwards. This is the origin of the term "2025 Cliff," which rapidly increased interest in DX and made it a critical business topic.
DX progress varies significantly among companies. While an increasing number of companies are having their management teams directly oversee DX initiatives and utilize them for strategic planning, many others have merely migrated legacy systems to the cloud without addressing the importance of data utilization. Despite the high level of attention, the actual progress remains limited.
Factors hindering DX progress include a lack of urgency among management and difficulty in visualizing cost-effectiveness, but the greatest challenge is Data Integration.
The Barrier to Data Integration
It is common to see multiple departments within a company implementing different systems independently. As a result, even when data integration exists between systems, differences in data granularity and accuracy often prevent the realization of operational efficiency or effective strategic planning, leading to project failure.
When the Sales Department implements System A and the Marketing Department implements System B, there are many cases where, even if the systems are integrated, the same company is recognized separately in System A and System B. Situations arise where they are identified as distinct entities due to factors such as corporate name changes or variations in notation.
Such discrepancies in recognition not only cause internal friction but also negatively impact communication with customers. If the Marketing Department approaches a customer as if they were a new lead while a sales representative is currently in negotiations with them, or if different pricing campaigns are presented, it can lead to customer distrust and potentially damage the brand.
If data is not correctly integrated, the understanding of current conditions—such as customer attributes and revenue—becomes insufficient, increasing the risk of making erroneous decisions. Since the essence of DX lies in "Rapid Decision-Making," low data accuracy is fatal.
The Increase in Cloud Tools and the Challenge of Data Maintenance
In recent years, the cloud tool market has grown rapidly, and it has become common for companies to implement multiple tools. This has made the fragmentation of information within companies a serious issue. As each department implements cloud tools tailored to its specific needs—such as Customer Relationship Management (CRM/SFA) systems, business card management tools, and customer service-related tools—a situation arises where the data across these platforms remains ununified.
When information is fragmented, data stored in individual tools is not integrated, making company-wide information sharing difficult. This hinders the ability to grasp the overall picture of customers and the market, thereby obstructing strategic planning and decision-making. While data is often maintained manually, the reality is that this process is time-consuming, labor-intensive, and has significant limitations.
Effectively integrating this fragmented information is essential for the success of DX. As the number of tools increases, there is a growing demand to integrate and organize data across all systems and establish processes to promote company-wide information sharing.
The "NICE" Concept: The Key to DX Success
To address the challenges of data integration, the "NICE" concept has been proposed. This consists of the following four processes.
-
Normalize : Standardize Data Granularity
-
Integrate : Assign Common Codes
-
Correct : Unify Notations
-
Enhance : Add Accurate Attribute Information
By achieving this, companies can smoothly utilize data for DX.
When DX is discussed, the focus often tends to be solely on human resources and systems, but an awareness of "data" is essential to achieve true DX. There is no Digital Transformation without Data Transformation. It is necessary to approach data integration with this level of strong commitment.
Companies that achieve "NICE" are the ones that can overcome the "2025 Cliff" and leap forward in the future business environment. Companies should once again focus firmly on the unexpected blind spot that is data.
Summary
To ensure the success of DX, improving the accuracy of data integration is indispensable. The variations in data granularity and accuracy that many companies face are significant obstacles to operational efficiency and strategic planning.
By incorporating the "NICE" process, it is important to organize data appropriately and establish a foundation for rapid decision-making. By strengthening Data Transformation, companies will be able to overcome the "2025 Cliff" and gain a competitive advantage in the future business environment.
Next Article
The Essence of DX is a four-part series.
You can view the next article here.
The Essence of DX Vol. 2: Organizing Customer Data from the Entry Point Is the Shortcut to DX ▶
